We welcome the Infrastructure Status given to the Affordable Housing Sector, this will surely give the sector an impetus as it gives builders access to capital at lower interest rates, the benefit can now be passed to the buyers. Other incentives like change in measurement methodology from build-up area to carpet area and extension of affordable housing scheme to 5 years from 3 years will help enhance demand.

Sectorally, we welcome the reforms and steps taken by the government to boost demand in the housing sector:

Capital gain tax : The period has been reduced to 2 years from 3 years, which means less capital gain tax for a person who intends to sell the house after two years of purchase instead of 3 years.

Joint Development Agreements: For development of property, the liability to pay capital gain tax will arise in the year the project is completed, which will reduce cash outflow for the project.

Notional Tax: Earlier the land holder had to evaluate the price of the land held while entering into an agreement with the builder and pay the tax on the notional gains. Now this payment will be deferred. Notional tax on unsold but ready inventory will be charged only after 1 year. This will encourage land owners to enter into development agreements with relators and it eventually lead to an increase in supply of properties.

With the new status and augmented resource allocation, we will witness an increase in housing supply in the affordable segment. The Hon’ble Prime Minister’s vision of providing 20 million houses across India by 2022 is now on the path to reality and as an industry we remain committed to it.